Selling the non-core in one sweep: Hands, golf, ski and fitness (2021)

The decision to stop holding on

The core of this decision was that businesses once displayed as the fruits of diversification were coolly reselected against a single measure: capital efficiency. Tokyu Hands, the golf courses and the ski areas were each, in their time, the product of a genuine strategy. But once their earning power had fallen and they had become assets in which capital lay idle, Tokyu Fudosan Holdings stopped holding on to them and entrusted each to the owner best able to make it work. Moving away from the instinct to keep everything in-house was of a piece with the shift to measuring management by the efficiency of capital rather than the quantity of assets.

Still, a decision to stop holding on loses something too. Diversification had offered the smoothing effect of spreading the core business’s cycle across other businesses, and the room for an unexpected new pillar to grow. Cutting the non-core away in a single sweep and concentrating resources on urban redevelopment and renewable energy buys the clarity of selection and concentration at the cost of a narrower business base. How a company that has weighted its bets on one priority district and one growth field will make up for the diversification it traded for lightness — that is the question the closing of the diversification era leaves behind.